Title: NFL Team Valuations Soar to an Average of $6.5 Billion in 2024, Driven by Media Deals and Stadium Success

The 2024 NFL Team Valuations report from CNBC reveals that the average value of NFL franchises has reached an impressive $6.5 billion. Proving to be highly lucrative assets for team owners, these valuations have outperformed traditional stocks, thanks to the league's booming media deals and thriving stadium businesses.

The Houston Texans serve as a prime example of the massive returns owners have witnessed on their initial investments. Despite never making it to the Super Bowl and holding a record of 152-202-1 over 22 seasons, the team's worth has skyrocketed from a purchase price of $600 million in 1999 to a staggering $6.35 billion today. This remarkable growth is more than ten times the initial investment and three times the gains of the S&P 500 during the same period.

While the majority of the NFL teams have experienced significant gains, the Washington Commanders and the Denver Broncos, ranked 13th and 14th on the valuation list, respectively, have underperformed in comparison to the broader market gains. However, it's worth noting that these teams were sold within the past two years. Similarly, the Miami Dolphins, ranked 8th, have lagged behind the S&P due to being sold in 2009 during the aftermath of the financial crisis.

The primary driver behind the surge in NFL team values is attributed to the league's substantial media deals. In particular, the NFL's television agreements with Comcast, Disney, Paramount, and Fox, which began last season, are now worth an average of $9.2 billion annually. This signifies an 85% increase from the previous deals. Furthermore, streaming partnerships with YouTube for NFL Sunday Ticket and Amazon Prime for Thursday Night Football ensure the NFL is guaranteed an average of $12.4 billion annually through 2032, nearly doubling its previous media rights cycle.

In addition to these bulk agreements, the NFL has further boosted its media revenue by selling exclusive streaming rights to high-profile games. For instance, last season, the league sold a Wild Card playoff game to Comcast's Peacock streaming service for $110 million. Moreover, this season, the NFL has secured lucrative streaming deals with Netflix, Amazon Prime, and Peacock, amounting to a total of $357 million per team in media rights fees.

The NFL's revenue-sharing model, combined with a salary cap that limits spending to about 49% of revenue, allows small-market teams like the Green Bay Packers and the Buffalo Bills to compete with larger-market teams in New York and Los Angeles. The Kansas City Chiefs, ranked 18th in valuations, have emerged successful by winning three of the past five Super Bowls despite being from a smaller market.

Stadium revenues also play a significant role in determining team values, as teams do not share revenues from luxury suites, on-site restaurants, merchandise stores, sponsorships, or non-NFL events. Last year, this discrepancy was particularly notable when pop star Taylor Swift's Eras Tour generated substantial revenue for hosting stadiums where she performed.

With an average revenue of $640 million and an average operating income of $127 million during the 2023 season, NFL teams enjoy a robust profitability. This financial success has translated into higher premiums for team sales, with potential buyers now hard-pressed to pay less than 10 times revenue for a team.

Ultimately, the exponential rise in NFL team values has paved the way for private equity firms to invest in the league. Following in the footsteps of other major sports leagues, the NFL has recently allowed select private equity firms to take up to 10% stakes in franchises. This move is expected to make it easier for potential owners to finance the purchase of a team, given the significant equity burden associated with current team valuations.

As the NFL continues to thrive, driven by its media deals and stadium successes, team valuations are expected to soar even higher, cementing the league's status as a highly attractive investment.

Note: The provided information is from CNBC's Official 2024 NFL Team Valuations report.